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when will auto market return to normal ?

**When Will the Auto Market Return to Normal?**

The automotive market has been one of the most impacted industries during the COVID-19 pandemic, facing supply chain disruptions, semiconductor shortages, and fluctuating demand. As the world begins to recover, many are wondering: when will the auto market return to normal? The answer, it seems, is not straightforward. Let’s dive into the latest insights and predictions.

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### **1. The “New Normal” for New Cars**
Before the pandemic, the automotive industry operated on a predictable model, with dealerships maintaining healthy inventories of new cars. However, the pandemic disrupted global supply chains, leading to a severe shortage of semiconductors, which are critical components for modern vehicles. As a result, new car production has been significantly reduced, and inventory levels remain far below pre-pandemic levels.

Experts suggest that pre-pandemic inventory levels may never fully return, at least in the traditional sense. Dealerships are now adapting to the “new normal,” where smaller inventories and higher prices are likely to persist. According to NerdWallet, manufacturers had only about 33 days of inventory in June 2022, a stark contrast to the 60-70 days that were typical before the pandemic.

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### **2. Used Car Market Trends**
The used car market has experienced its own set of challenges. During the pandemic, demand for used vehicles surged as new car production slowed, driving prices to unprecedented levels. In August 2022, buyers were paying an average premium of $8,497 for used cars compared to pre-pandemic levels. However, recent data suggests that the market is beginning to stabilize.

Used car prices have started to depreciate, signaling a return to normalcy. According to J.D. Power, used vehicle values will begin to decline by late 2022 and continue into 2023. This shift is partly due to increased production of new cars, which is expected to ease demand for used vehicles. However, prices are still far from pre-pandemic levels, with the average used car price remaining 30.1% higher than normal.

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### **3. The Role of Supply Chain Recovery**
The automotive industry is heavily reliant on global supply chains, and the pandemic has exposed vulnerabilities in this system. While progress has been made in addressing the semiconductor shortage, experts caution that full recovery could take years. KPMG predicts that prices for both new and used cars will remain elevated at least through the third quarter of 2023.

Automotive production is expected to ramp up in the coming months, with automakers aiming to meet demand as supply chain issues ease. However, the industry must also contend with inflation, rising interest rates, and economic uncertainty, which could impact consumer spending on vehicles.

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### **4. When Can Buyers Expect Relief?**
For buyers, the good news is that there are signs of improvement. New car production is expected to increase in 2023, which could help stabilize prices. Used car prices have already started to decline, and this trend is likely to continue throughout the year. However, full recovery to pre-pandemic levels is not expected anytime soon.

Clark Howard notes that while prices are beginning to drop, it will still be a while before used car prices return to “normal” levels. Similarly, the Motley Fool predicts that the used car market crash could be on the horizon, with signs pointing to a slowdown in price increases.

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### **Conclusion: Patience and Adaptation**
The auto market is slowly moving toward a new equilibrium, but “normal” may look very different from what it did before the pandemic. Buyers can expect higher prices and limited inventory for the foreseeable future, with gradual improvements in 2023 and beyond.

For those in the market for a car, patience may be the best approach. As production increases and supply chain issues ease, prices are likely to stabilize. However, it’s clear that the auto market will continue to evolve, and consumers will need to adapt to the “new normal” in the meantime.

Whether you’re buying, selling, or trading in a car, staying informed about market trends will be key to making the best decisions for your needs.